Investing in Manufacturing?

[Jellyghost]

The Short: If you bought a business or machine to make money, what would you buy? Only ideas under a million dollars.

The Long: I have a successful career in nonprofits and real estate. My family may need to move to a new area, and my current career is heavily relationship based. I can't imagine starting from scratch and supporting my big family. If financing isn't a problem, is there something that could be manufactured to make a living? I am confident that I can handle the sales, marketing, and human side, but I would need to learn the technical side. My undergrad is in mathematics, but I don't have much experience. Thoughts?

[superman]

What i can say is that unless you are very hands on and interested in making something already yourself. It will likely be hard to insert yourself into a situation that you need to make a product that is dependent on making money to support your family out of the gate. If going into manufacturing is the route you want to go, i would recommend taking some classes getting an idea of what is involved and spend alot of time understanding the market for the type of product you want to produce. It can be done, but would not surprise me if it took 6months plus of product development, marketing, design and iteration after iteration to get things even slowly started and even at that may not be truly making money for some time longer.

Seems like alot of people are into EDC stuff, but i know that seems to be a flooded market now. Alot of people are into relationship driven purchases by following makers and supporting their growth and product development along the way.

Though not sure what you would want to make to direct you. Are you planning to make a trinket/doodad or cutting boards, desk art, tools, or focus in a specific niche field of production ( i don't recommend paintball).

Tell us some more about what your thoughts are and what direction you truly would want to go. Would that budget be you as the single employee?

[Jellyghost]

I have buddy here that has a factory that works wire. He makes bucket handles and the things that hold rebar in place for cement structures. I am going to get involve there to try and figure out what's possible. The reason why I thought it would be possible is because of my real estate experience. A electrician/plumber/tradesman with a truck and tools makes far more than a tradesmen without those assets. Similarly, if you buy a big rig, the asset will make you money if you put in 40 hours a week. I was wondering if there was something similar in manufacturing.

[superman]

yes and no. electricians/plumbers/tradesman are skilled labor so that is where the money making happens. Big rig the money making happens with the truck for sure.
manufacturing is kind of a split between the 2. Where skilled labor is certainly required in order to do the CAD/CAM, part setup, but with out a machine you aren't going to be making parts. Doc and i both will tell you that it is far more difficult than designing a part in cad and clicking the go button. Machines matter alot, based on the product your producing. high precision 5 axis parts. The machine alone would be most of the budget. 3 axis parts with low precision could be made by pretty much any machinist.

I have heard alot of people refer to swiss lathes as being similar to consistent money, but you would have to have someone trained to run one and enough work to justify it. They are the kind of machine that you setup to run thousands of parts at a time vs say 10 of something and then change to make 10 of something else.

[Jellyghost]

Thank you for taking the time to answer this type of general question. I am trying to figure out something to research further.
Do all viable businesses include design? Are their profitable businesses that run other people's designs on machines?

[flyweightnate]

There's a whole industry around outsourced manufacture - whenever the home shop was too full for prototype, we'd sign NDAs and outsource everything from fabrications to turbo impellers. Casting and PCBs are probably the least likely to be done in house. Nobody wants to own a foundry, since they're hot and smelly, then many small foundries have to outsource their patterns, so I've wound up paying four different companies to get one part. (Prototype pattern in wood, pour, machining, final/ permanent pattern in steel, poured again, machined again.)

[Jellyghost]

Great Comments. Can you tell me what google searches I would use to see companies that help others with outsourced manufacturing? I would like to see what they offer.

[flyweightnate]

Back in the day it was MFG.com; I don't care for them now. There are several platforms, but I've only searched as a customer. Maybe "instant quoting engine" would be a good string, then it's just figuring out whether the platform has a supplier network or manufactures in house.

[flyweightnate]

My first thought was the above. Something like a Mazak Integrex (5 axis lathe) can always find work, whether automotive or aerospace or whatever, but running it is a real art. And someone's always trying to come in a few bucks cheaper, if they're OK with just a bit less profit. I think Innovair is up that way (KC), and they're using lots of 5-axis impellers, but they're nothing compared to, say, Cummins.

I feel like there are some niche businesses that depend on the part of the country. In the older and wetter areas, a combo between a urethane foam truck, vacuum truck, and pressure washing truck is a great solution for foundation insulation and sealing. Where it's cold and rocky, geothermal wells have a niche. Printing/ stickers is big in some areas, electrical assembly in others.

Read "Lean manufacturing for the small shop" by Gary... oh, something, and he offers good advice on how to remain flexible in production. If you're small, flexibility lets you take jobs the big guys don't have the time to set up for. Water jet, laser, and plasma are flexible processes, and can be entered inexpensively. I even knew guys that built their own plasma systems and did well enough, using each cutter to build parts for the next.

If you do go that route, I've spent some time helping get a place certified ISO9001, which is one of the basic requirements for many customers, and I've done a fair bit with process flow and reliability. I could offer pointers once you get there. A good government contract or two can make it easy to keep the lights on, so the right certs to bid can make all the difference.

Just remember - economic profit always tends to zero, so you're fighting against the investment others can make, and the wages others can accept, for the skills others have. If you can't find an edge on skills or capital, it's a race to the bottom on wages. Choose greedy competitors if you're not sure you have an edge.

[Jellyghost]

Thanks. I will get that book and I should probably research certifications.
The foam insulatioin is a pretty good idea. I've hired that done before, and it doesn't seem like a steep learning curve.
I am going to see if I can visit innovair too.

[k_obeastly]

open a jersey mike's? 10ish years ago, I'd have said subway but...they seem to be on their way out. Manufacture sandwiches.

[SignOfZeta]

Turn-key money makers do exist, but usually only temporarily. The automotive dealership is the only easy way for a guy to legally rake in huge amounts of reliable money for doing absolutely nothing and those cost a few million. Running a dealership is for sons and daughters of the dynastically wealthy. It has a title like a job…but they just sit there or yell at people or never show up. It’s a great gig for the horrible.

If you think you’re going to buy a car wash or a vending route and make money without devoting your life to it you’re probably wrong. Lots and lots of people already had that idea and you’ll find that people can actually go broke running a laundromat or a liquor store, all the time, even though it sounds impossible from the outside. It’s harder than it looks…and actually manufacturing anything in the US, at a profit, for years on end is *extremely* hard unless what you’re manufacturing is bullshit.

Therefore I suggest you figure out what you’re good at and go down that road rather than looking for a way to get into something you know nothing about that somehow prints money.

[Grendel]

I was going to comment along the lines of "Turn-key money makers do exist, but usually only temporarily" as well. I had a side business for about a year and a half making pre-assembled wiring harnesses for a local manufacturer that they used in producing automated acoustic testing fixtures. It was very lucrative but ended abruptly when they off shored a lot of the work. I am so glad I did not try and bring on employees.

[Tarsun2]

i was always told that, if i read about it online, its already too late. lol

[Chuck E Ducky]

If I were getting into manufacturing it would be strictly government contracts. There are ways to be very successful doing it but it’s political so I’m not going to go into it. In short there are people you can hire to be the face of your business that will put you ahead of everyone else when bidding on contracts. Lots of business are building of the model and are extremely successful. Good employee Management skills are need. The contracts are so lucrative that the cost of doing so is written into the business model. It takes a bit of capital to get it started.

[Jellyghost]

Big picture, I agree with most of the things said. Over the last twenty years, I have been self employed: started two nonprofits, own and renovated 10 rental units, pest control business, and real estate agent. If I move, I would lose those sources of income. I could manage the rentals from afar for a short period, but they would need to be sold/reinvested. I think the pesticide business could move and grow, but I don't want to deal with the chemicals more than I already do.

I have drawn up and scrapped countless business plans. Based on my experience, I think a person can make $35k a year self employed doing all types of strange things. If $150k is invested in assets, $70k+ is reasonable. My question about manufacturing is coming from an intuition that I have. I have been wondering if a largish investment could create a $150k a year income if you work 40 hours a week.

Since 2012, MCB has changed my perspective on life. It gave me the confidence to tinker around, and I know there is a great knowledge base on this forum. I have lurked on the Practical Machinist forum, but they aren't interested in newb education.

The value I find in the responses to my original post are the ones that give me a few search terms or paths to learn more. Even the ideas that are just shots from the hip are interesting things to explore. I am still hoping for more comments and pms.

[Chuck E Ducky]

Depends on location $150k in NY will allow you to live just above poverty with a family of 4.

Machinists can be very successful, but good luck, finding the skilled laborers, without doing everything yourself. We basically spent two generations, shitting on trade skills, there aren’t a lot of them out, there. The ones that have the skills work for themselves or are already established. Very very few new ones in that field. You would need to be skilled yourself in the trade and build off that by training good loyal employees.

For reference, my uncle was making over $6 million a year as a machinist. He owned his own business that had tons of employees and millions of dollars worth of equipment. He’s a highly skilled machinist. He got divorced, because he was at work all the time lost everything. Sold off all the equipment and retired off the bones of the business. He moved to Florida before everyone else fled the parasite tax states and brought a boat. He fishes a lot now.

[DocsMachine]

Some good info here, I wish I had advice like this when I was starting out. Or... perhaps it'd be more honest to say, I wish I'd listened to this kind of advice back then.

Not much for me to add, it sounds like most of you guys have more real-world experience than I do. Then again, I'm just one twit in a garage in the back woods of Alaska, trying to make things for a niche segment of a niche market. A businessman I ain't.

That said, going along with some of what the others have said, starting a manufacturing shop- at nearly any scale- is not an ideal investment. Or, to clarify that a bit, don't put together a machine shop, and then go looking for work, or a product to make. You find the potential work, or come up with the product or product line, and assemble the shop around it.

DYE is a perfect example. Dave worked along with Earon Carter to learn machining, and came out with a popular, quality product, at a time when the market was clamoring for such things. (The original DYE stainless barrels.) As I understood it, he hand-made the first few batches, then contracted out for production after that, then used the profits to assemble his own manufacturing concern.

The one product turned into two or three (DYE aluminum, Boomstick) which branched out into others. (Marrying into the long-established JT Racing fortune didn't hurt, either. )

Today, DYE is a multimillion-dollar-a-year aerospace manufacturer, that happens to have a side line of a few paintball products.

But, that's also lightning in a bottle. For every DYE, there's a hundred Indian Creeks, and a thousand Air Powers.

And the market and economy play a huge role. When DYE was starting out, paintball was growing by leaps and bounds, the overall economy was pretty good, and the sport was wide open to innovation. Today, that's all changed, and drastically. The economy is in the dumps, and will be, in my opinion, for at least the next eighteen months or more, the sport is stagnant at best, probably actually shrinking slowly, and while we're still open to innovation, kind of, I really don't see a "better mousetrap" type product that could take off the way the DYE barrel did back then.

That's paintball, of course, and there's far better markets out there to get into. But, for the same reason, you need to know that market.

Bottom line? I would not recommend, in this economy, investing in manufacturing. If you have a product, that you either know or have strong reason to believe will sell in useful numbers, invest in just what you need to make THAT. And if you turn a profit, then consider investing in more equipment.

Doc.

[k_obeastly]

hey, ICD is still around. They just make firearm stuff and engine diapers now.

[Jellyghost]

Thanks Doc. Your advice of product before tooling seems to blowup my idea.

[flyweightnate]

I'd say it partially depends on the equipment, market, and your skills. A fiber laser can do far more products with minimal setup than an die casting foundry. But yes... know the market at least exists and can be penetrated before investing in tooling.

[DocsMachine]

hey, ICD is still around.

-Exactly. At a fraction of the output they used to have, and have almost entirely bailed from paintball. That was my point: For every big, successful manufacturer (Smart Parts, WDP, DYE, WGP, etc.) there's hundreds of smaller ones that weren't so successful but are still around to one degree or another (ICD, AKA, Sterling) and thousands more that closed entirely, often after only making one or two products that may never have gone anywhere. From whole markers (Tribal, Diablo) to accessories (Mike Rock barrels, those kits that let you swap a CO2 tank with a quarter-turn, extendible radio-antenna squeegees, ad nauseum.

I'd say it partially depends on the equipment, market, and your skills. A fiber laser can do far more products with minimal setup than an die casting foundry. But yes... know the market at least exists and can be penetrated before investing in tooling.

-'Zactly. And that's the beauty of it- a laser, a plaz table, a waterjet, a CNC turning center or VMC, can make damn near anything. The plaz table can make parts and brackets for trucks and offroaders, the laser can cut out sheets it make electrical enclosures, the milling machine can make anything from a fidget spinner to an AR lower.

BUT... none of them are cheap. If you invest $500K in machines, and then go looking for work for those machines, that's a good way to lose your investment.

Doc.

[superman]

BUT... none of them are cheap

Thanks for the reminder Doc....Glares over at milling machine, picks up phone to text electrician again......